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Liberty Property Trust issues FY'17 guidance, details development activity

Liberty Property Trust offered funds from operations guidance for 2017 in the range of $2.40 to $2.52 per share, maintained its FFO per-share estimate for 2016 in the range of $2.36 to $2.38 and said it expects to cut its dividend.

The company also provided an update on the development front, saying it will kick off construction on $400 million to $500 million in wholly owned, primarily industrial properties in 2017. It expects to deliver $250 million to $350 million of development properties at yields ranging from 7.5% to 8.5%.

The company said its 2017 financial projections reflect rent growth in both its industrial and office portfolios. The 2016 outlook, meanwhile, includes a charge associated with an early debt extinguishment amounting to about 18 cents per share that was incurred during the third and fourth quarters.

Liberty Chairman and CEO Bill Hankowsky said in a release that the company has concluded its strategic repositioning and expects to return to a normalized disposition level of roughly $200 million to $350 million in 2017. It will use property sale proceeds to support its development and acquisition activities.

The company said it expects to reduce its dividend to 40 cents per share with its upcoming April 2017 payout from its current dividend of 47.5 cents per share. The company said the reduction is a result of its repositioning and asset sales.

In 2016, the company had seven development starts representing $200 million thus far, including 2 million square feet of industrial space across six markets and an ongoing 236,000-square-foot build-to-suit office development at Liberty Center Rio Salado in Tempe, Ariz. It has also kicked off development of American Water's headquarters in Camden, N.J., and closed on a 170,000-square-foot lease in suburban Pennsylvania that it said mitigates its largest office-lease expiration in 2017.

The S&P Capital IQ consensus FFO per-share estimates for 2016 and 2017 are $2.40 and $2.46, respectively.